The velocity of circulation is
A) the relationship between increases in income and investment.
B) the relationship between income and spending.
C) the average number of times per year a dollar is spent on goods and services in GDP.
D) the ratio of currency to demand deposits.

Question

Quizplus · Accepted Answer

The velocity of circulation refers to the rate at which money is exchanged in an economy. Specifically, it is the average number of times per year that a dollar is spent on goods and services included in GDP. Therefore, option C is the correct choice. Options A, B, and D are incorrect as they do not accurately describe the velocity of circulation.

The Velocity of Circulation Is